Do You Need ID Theft Insurance?
It's not surprising that the increase in identity theft has also given a boost to identity-theft insurance. After all, it can be very expensive and extremely time-consuming to restore your good name and credit once your personal information has been used by another person to commit fraud.
But is identity-theft insurance a good deal? The National Association of Insurance Commissioners raises some key questions you should ask--and, of course, answer--before signing up for a policy that typically costs between $25 and $50 a year.
The association of state insurance regulatory officials notes that ID theft insurance doesn't protect you from becoming a victim; nor does it cover direct monetary losses that are incurred. What it does cover is the costs of reclaiming your financial identity, such as the costs of making phone calls and copies of documents, mailing documents, time off work and attorney fees.
The association suggests some key issues to consider before signing up for ID theft insurance. First, check your current homeowner insurance policy; it may already include ID theft coverage. If not, you may be able to add it to your policy for a small fee.
* What are the policy's limits? Most limit coverage to between $10,000 to $15,000.
* Is there a deductible? Some policies require you pay your first $100 to $500 in costs.
* If the policy covers lost wages, are there restrictions? And what is required to trigger this coverage? If you use your vacation time, for example, that may not qualify as unpaid leave and lost wages.
* If the policy covers legal fees, find out if there are limits and if the legal work needs to be preapproved by the insurer.
Of course, for any insurance policy, do some comparison shopping (looking at the above coverage issues as well as price) before you sign.
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